If sweet catering had recorded transactions using the accrual method, how much net income (loss) would they have recorded for the month of may? If there is a loss, enter it with parentheses or a negative sign.
Answers
The expenses are to be taken as negative and income as positive.
May1- Rent paid for 3 months= 2400$.And that of May= 2400/3=800$, which is an expense.
May 5- Paid electricity bill of 180$. This is also an expense and appears in expense side of income statement.
May 9- Received cash from customers for meals served to them.This is an income and appears in the income statement as 670$.
May 14- Equipments bought for cash would appear in balance sheet and not in the income statement.
May 23- We recorded a revenue transaction here of 2270$. This will appear in income statement Revenue side as 2270$
May 31- Accrued salary means the salary which belongs to the month of May but still is not paid. Since we are following Accrual concept we have to record it in the expenses side of income statement as 3700$.
May 31- The depreciation on equipment purchased would appear in expense side of income statement as 150$.
Now,the sum of expenses= 800+ 180+ +3700+150=4830
And the sum of incomes = 670+2270= 2940
Difference= -1890.
Thus, net loss= $1890.